Post-GST, hosiery majors gear up with higher ad spends

As the ₹25,000-crore hosiery industry gets more organised after the rollout of the Goods and Services Tax, domestic players such as Lux, Dollar and Rupahave decided to spend lavishly behind new campaigns and brand ambassadors, assigning up to 10 per cent of their top-line behind ad spends.

Since GST is expected to create a level-playing field with unorganised players, the listed hosiery majors are hoping to increase their top-line, and will be taking further efforts to get noticed with their premium offerings with higher ad spends.

For instance, Dollar Industries has been steadily increasing its ad spends over the years to take on the unbranded players; post-GST, it plans to get more aggressive with its ad spends.

“We are the largest spender in the hosiery segment because two-thirds of the category is still unorganised and we need to snatch business way from the unbranded players,” said Vinod Gupta, Managing Director, Dollar Industries. “We have capped our ad spends at ₹85 crore this year and will be spending heavily to promote our new premium brands like Force NXT.”

The Kolkata-based company, which makes inner wear brand Big Boss, is one of the highest spenders (10 per cent of sales) on advertising, among competitors such as Page, Rupa and Lux (4 per cent, 8 per cent and 6 per cent, respectively).

According to a report by Edelweiss, “The management of Dollar Industries is planning to maintain the advertisement spend run rate at 8-10 per cent of revenue in future as well. Of its ad spends of ₹86 crore in 2017, ₹40 crore was spent on television, ₹20 crore on newspaper and the balance on outdoor medium.”

Dollar has always had high-profile brand ambassadors such as Salman Khan, and now Akshay Kumar, behind it.

Others such as Lux Industries, has got Varun Dhawan on board.

“Having celebrities is going to help us; post-GST, the industry will get more organised and we will need to compete harder in the segment,” said Udit Todi, Senior Vice-President, Lux Industries. In fact, GST should lead to 15 per cent growth in our top-line, and ad spends are expected at 6 per cent, which should lead to higher spends in the long term.”

Another hosiery major, Rupa, has unleashed a new campaign post-GST with actor Ranbir Kapoor to endorse its Macroman sub-brand. “Post-GST, the costs will increase for the unbranded players while our top-line should also increase, due to which our ad spends will increase even further. We have got a new advertising agency (Publicis) on board with an annual ad budget of ₹80 crore, and the new campaign with Ranbir Kapoor has been the most expensive one by the company,” said Vikash Agarwal, President and Brand Director, Rupa.

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